IMF Commends Nigeria’s Reform Drive, Predicts 3.4% Growth in 2025
By Patience Ikpeme
The International Monetary Fund (IMF) has acknowledged Nigeria’s ongoing economic reforms, describing them as pivotal to achieving improved macroeconomic stability and resilience.
This assessment was contained in the Fund’s 2025 Article IV Consultation report on Nigeria, issued after the conclusion of its Executive Board’s review in Washington, DC.
According to the statement, the IMF directors noted that the Central Bank of Nigeria (CBN) has maintained a tight monetary policy stance, which they recommended should continue until disinflation becomes more firmly established.
The Fund observed that this approach has contributed significantly to lowering inflationary pressures and stabilising the exchange rate.
The IMF praised measures taken by the Nigerian authorities to strengthen the banking system, including the ongoing recapitalisation exercise, and noted the central bank’s efforts to deepen financial inclusion and stimulate capital market growth.
The report also identified the need for robust risk-based supervision in areas such as mortgage lending, consumer loans, fintech operations, and cryptocurrencies to preserve financial sector stability.
The directors welcomed Nigeria’s progress in bolstering its anti-money laundering and counter-financing of terrorism (AML/CFT) framework, while stressing the importance of addressing the remaining gaps to facilitate the country’s removal from the Financial Action Task Force (FATF) grey list.
Further reforms by the central bank, such as ending the direct financing of fiscal deficits and measures to enhance governance, were seen by the IMF as laying the groundwork for an effective inflation targeting regime. The report noted improvements in foreign exchange market operations, with reforms designed to support price discovery and enhance liquidity.
Directors advised that Nigeria adopt a clear foreign exchange intervention strategy to help limit excess volatility, adding that the exchange rate remains a crucial shock absorber for the economy.
Reflecting on Nigeria’s broader reform journey, the IMF observed that the removal of costly fuel subsidies, halting of monetary financing, and improvements in the foreign exchange framework have collectively boosted investor confidence. This renewed market trust has enabled Nigeria to re-access the Eurobond market successfully and prompted a revival in portfolio inflows.
Economic growth in 2024 accelerated to 3.4 per cent, driven largely by higher hydrocarbon output and the dynamic services sector. However, agricultural output remained constrained, affected by persistent security issues and declining productivity.
Looking ahead, the IMF projects that Nigeria’s real GDP will grow by another 3.4 per cent in 2025, underpinned by increased oil production, the expected benefits from the new domestic refinery, and sustained strength in services. Over the medium term, growth is forecast to hover around 3.5 per cent, supported by continued domestic reform momentum, despite external uncertainties.
The Fund reported an increase in gross and net international reserves during 2024, aided by a solid current account surplus and stronger portfolio flows. Reforms to the foreign exchange market and timely interventions also helped stabilise the naira.
Inflation, which averaged 31 per cent in 2024 based on the rebased CPI data from the Nigerian Bureau of Statistics, declined to 23.7 per cent year-on-year by April 2025. The IMF anticipates further disinflation over the medium term, supported by tight macroeconomic policies and an expected moderation in retail fuel prices.
On the fiscal front, the report noted that government revenue benefited from naira depreciation, improved tax administration, and increased grant inflows in 2024, offsetting higher interest payments and overhead costs. Nonetheless, the directors advised that fiscal policy should remain broadly neutral to sustain macroeconomic stabilisation and channel resources toward growth-enhancing investments.
Despite progress, the IMF identified significant downside risks that could impact Nigeria’s outlook, including global market volatility, potential declines in oil prices, rising financing costs, and lingering security challenges. These risks, the report noted, could undermine fiscal balances, external positions, and food security, as well as put renewed pressure on the exchange rate.
In response, the IMF directors encouraged the authorities to continue pursuing agile policy responses to protect and deepen macroeconomic gains, support growth, and reduce poverty. They also recommended phasing out existing capital flow management measures in a carefully sequenced manner.
To reinforce the foundations for inclusive and sustained growth, the Fund called for swift implementation of cash transfer programmes to cushion vulnerable populations. It also acknowledged progress on advancing the tax reform bill, which aims to expand revenue generation and create fiscal space for development spending while ensuring debt sustainability.
Beyond macroeconomic policy, the IMF pointed to key structural priorities, including improving security, reducing bureaucratic bottlenecks, boosting agricultural productivity, closing infrastructure gaps, especially in power supply, and enhancing health and education investments. Strengthening resilience to climate-related shocks was also identified as essential.
The directors concluded by noting that addressing barriers to private credit expansion is necessary to support broader economic activity. The report reaffirmed the IMF’s continued capacity development support and stated that improvements in data quality remain vital for sound and evidence-based policymaking.
